We'll leave it to bloggers and the not-quite-ready-for-prime-time media to examine the Fed's method of paying for whatever it must buy at the next auction. They're likely to find elements of Ponzi, Rube Goldberg, and Bernie Madoff, but they'll first need to get past the stench of it to peel away some layers. In the meantime, with sovereign banks, U.S. households, hedge funds and other would-be buyers becoming increasingly skeptical toward Treasury debt, it seems plausible the central bank will deplete its interest "income" more rapidly than policymakers might hope.
Concerning the stock market, lest our bullish forecast worry or frighten any right-thinking permabears, we would need to see the Dow, currently trading around 12,261, close for two consecutive days above 12523 before we infer that a powerful run-up to 13182 is likely. That last number is a Hidden Pivot target, and if you are skeptical about whether it will "work," try asking a few denizens of the Rick's Picks chat room yourself. With just a mouse-click and a few keystrokes, you can get a free subscription that includes access to a 24/7 chat room that draws veteran traders from around the world. Meanwhile, to put things in proper perspective, we'll note that we don't expect the Dow to get nearly as high as 13000. The 12523 "midpoint pivot" is probably as good as we'll see, but we'd be eager to get short at those heights in any event.
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